Ron Paul Questions U.S. Mint on Gold Coin Shortage

The United States Mint has a gold problem. As demand for precious metal in the futures indexes and in physical gold bullion coins increases as the dollar weakens, there’s been a run on the Mint. Don’t worry, there’s no shortage of gold. It’s just that the Mint doesn’t have the resources to make it into coins due to outsourcing and budget cuts decades ago.

The problem lies in manufacturing the blanks. The blank planchets are not made at the Mint, which hasn’t had the production capacity for this stage of the minting process since the budget cuts of 1981. More…

Rush Transcript

Ron Paul: Thank you, Mr. Chairman, and welcome panel. I remain opposed to the Mint’s current effort to gain greater power in determining the composition of circulating coinage. It is unconstitutional to delegate the determination of the metal content of our coinage to the Secretary of the Treasury. Under Article 1, Section 8 of the Constitution, the Congress is given the power to coin money and regulate the value thereof. It’s a shame the Congress has already unconstitutionally delegated its coinage authority to the Treasury Department, but that is no reason to further delegate our power and essentially abdicate Congressional oversight. While I sympathize with the aim of saving taxpayer’s dollars by reducing the cost of coinage, it is disappointing that our currency has been so greatly devalued as to make this step necessary. At the time of the penny’s introduction, it actually had some purchasing power. Based on the price of gold, that one penny would have purchased, in 1910, what requires 57 cents today. It is no wonder that few people nowadays would stoop to pick up any coin smaller than a quarter. One of the witnesses on our second panel mentions the importance of the Mints production of bunion coinage and the danger of counterfeit collector coins that may or may not minted from silver or gold. It’s a shame that instead of protecting the value of the dollar to insure that precious-metal coins could still circulate as money, or enforcing counterfeiting laws to stop the flow of clearly fraudulent coins, the federal government insists on printing trillions of dollars out of thin air and prosecuting individuals who attempt to create precious-metal currencies to compete with the devalued U.S. dollar.

The topics discussed in today’s hearing exemplify how far we have fallen, not just since the days of the founders, but only in the last 75 to 100 years. We could not maintain the gold standard nor the silver standard. We could not maintain the copper standard, and now we cannot even maintain the zinc standard. Paper money, inevitably, breeds inflation and destroys the value of the currency, which harms all Americans. I wait for the day that we have a committee hearing when we talk about once again reinstituting sound money for our people.

I yield back.

Ron Paul: Chairman, I want to follow up on that very subject with Mr. Moy because I had some questions myself.

Has the Mint ever made planchets or is that something they’ve never done?

Mr. Moy: Yes, the Mint has made plantchets in its past, but it got out of the business a decade ago mainly because of the extreme cost of doing it, the environmental hazard for doing it, and it was determined at that time that there were other private entities who could make it more cheaply and safely than the United States Mint could.

Ron Paul: Okay. And because of the shortage that you didn’t have and you had a mandate, you had to put it in to the non-proof coins. That is correct? And you’re asking now for authority to say that you could take some of that money out or coinage out and make proof coins. Now is this the first year that you’ve missed making proof coins, in 2009?

Mr. Moy: Yes, this is the first year that we have missedRon Paul: If the problem were corrected, is there such a thing as minting coins a year late? Because some of those collectors, I’m sure, are going to say, “Oh, why can’t I have a 2009 coin?”

Mr. Moy: The Mint is required to basically sell the coins that are minted in the year that they’re made. So if the date is 2009, we sell 2009 coins in 2009.

Ron Paul: So the 09 will be missing.

Mr. Moy: Is missing.

Ron Paul: Yes.

Mr. Moy: And what we’re trying to do is prevent 2010 from being missing.

Ron Paul: Now it still baffles me that we can’t make a plantchet. I don’t know anything about the equipment or what is necessary. But doesn’t this country take jewelry and make complicated jewelry out of gold? Isn’t this just pretty simple? This just really, you know, is confusing to me why this can’t be accomplished. Instead of looking for more plantchets you’re saying, “Well, let’s give me more authority so I can make a few of these proof sets rather than bringing this out.” I mean, what would a businessman do about this? Would he always resort to going to Australia to do this? This just seems so bewildering that for a problem that seems rather simple, we couldn’t have had an easier solution for this. I mean, right now we don’t even have a solution.

Mr. Moy: Well, a businessman has to weigh two things. On one end, to make the planchets ourselves, we need to make capital investments in order to develop the smelters, the chemical processing, take care of the environmental hazard in getting rid of the chemicals; all of those issues. And on the other side, we have a limited amount of planchet makers around the world who don’t want to increase their capacity unless they get guarantees from government that we’ll continue buying at such high rates for some foreseeable future, so they can spread out their capital investment. So those are the two choices, and right now it is the most efficient choice to be able to expand the quantity of plantchets that we’re getting from the various suppliers.

Ron Paul: No, there are private companies making, you know, not coinage, but they make medallions and I’ve never heard of them running out of plantchet. You think they have that problem?

Mr. Moy: Yea. They don’t because they’re not in the business of being the largest bullion maker and supplier in the world. Last year we sold 28 million ounces of these. This year we’re headed to 32 million ounces. On an average year, the Mint might make 8 million ounces of this. So the other people don’t have to deal with the volume issue that the United States Mint does.

Ron Paul: This is awfully disturbing. What are we going to do when we go on to the gold standard? You won’t even be able to make the gold coins? You can’t even keep up with a few collectors. We’re in big trouble.

Mr. Moy: By that time my term in the Mint will be done and I will start a planchet making companies to pick up the excess.

Ron Paul: Well, it seems to me – I don’t know what it is -but it seems to me that there has to be a market answer for this, and maybe it’s the promise to take these, no matter how many they make. Maybe that would help. I mean, they’re not going to lose their value like it’s a risky thin. But you’re dictated by law that you have to promise these private sources on how many you can take?

Mr. Moy: We’re not dictated by law, but just by business practice. When a company invests in expanding their capacity, they’re going to want to make sure that investment pays off over time and they’re not willing to do it unless they get a commitment from their buyers to buy up all their excesses.

Ron Paul: I have a question for Mr. Clark. Why do you think the Mint only uses three suppliers to provide these planchets?

Mr. Clark: I’d like to be able to answer that, sir, but I have no further knowledge.

Ron Paul: If you know the business, are there other people who can make them in the country?

Mr. Clark: I believe there are other companies out there that are very interested in offering their services to the Mint.

Ron Paul: And I understand they are not restricted by the law to these 3 individuals.

Mr. Clark: I am not aware …

Ron Paul: You know, if we get the (?) coin, we’re still going to have that same problem. Where are we going to get the planchets from, because they can’t even supply the demand right now? You suggested that we get the GAO involved and take a look at all this and see if we can get recommendations. I’m just wondering how much we really need this. Is there any other way to get some professional or political advice on this without an audit? Or do you see that the audit is something is very, very important?

Mr. Clark: Are we talking about the planchets or the (?) coin, sir?

Ron Paul: Well, you’re recommendation for the audit to review the Mint’s procurement processes for the blanks.

Mr. Clark: We thought an outside agency looking at their process – and to answer your question about why they’re restricting their sources to only 3 separate entities, someone with a separate set of eyes and a kind of fresh look might be able to determine that there is a better way to go about it. That’s why we were making the recommendation.

Ron Paul: And you’re other recommendation was that we require all the planchets be made here in this country.

Mr. Clark: We believe there is sufficient capacity within the United States borders to do so.

Ron Paul: Do you think there is a lot of difference, a net difference, in making these coins if we didn’t require that the gold came from this country? Isn’t gold generally pretty fungible? Does that make a big difference?

Mr. Clark: I think the Congress was interested, at the time they passed that requirement back in 1985, to promote the sale, the job creation amongst American mining companies that domestically produce gold to use for the American buoyant coins programs. But you’re right. I mean, obviously gold is fungible and it conceivably could be acquired anywhere. I don’t think that’s part of the problem. I think there is sufficient gold supply, it’s just the actual fabrication of the plantchets, for some reason that’s limited to three separate sources at the current time.

Ron Paul: Yea. It just seems to me, like I mentioned earlier in our hearings, that this problem seems to be unique to government. You know, if private industry is doing this, they just don’t run into this problem. Some of this, I think, just like the emphasis in 1985 to use domestic gold and all; I can understand that. But it certainly is very long way from a business person adjusting to supply and demand and doing it at the best price. There is no way that the government can compete with private industry in even making a coin these days. I was just wondering about how strongly you felt about that. But I really don’t have any other questions and I’m going to yield back my time.

(If you’ve found a spelling or transcription error, please notify us anonymously by selecting the misspelled text and then pressing Ctrl+Enter. Thank you!)

I voted for Ron Paul last time, I dontated money twice, I told all my friends and family that Dr. Paul is the only politician in Washington with any integrity. I’ll vote for him again, and I’ll do anything I can to help him win.

gold standard one way constitution ensured sound economics, check of government. hold of value, couldn’t be means government to fund in red programs via FED/Treasury.Ever hear phrase “worthless as continental”?!paper fiat money nothing new during writing of constitution.’Our’ system of ‘money creation’ relying on debt is means by which many irresponsible out of control DC bureaucracy programs are funded via the FED/treasury!

how did WE THE PEOPLE ever give the profits of US DOLLAR creation, tying it to DEBT CREATION, leading to lucrative profits of a privatized banking cartel for the creation of every ‘US dollar’!? Constitution called for an honest system based on sound economics, a hold of value! Checked against government and ensured responsibility! Almost every check/provision on the government by the constitution has been usurped, if not completely ignored by out of control irresponsible DC!

MikeM3113

You imply gold has no value Escape2SegaSity. NO! PAPER HAS NO VALUE! To ignore how FED is used to enable out of control debt to fund unlimited expansion of Obama/Bush in the red programs via FED/Treasury is a leap in logic you fool!

It’s not that he’s not qualified to be President, it is that our country is blindfolded and brainwashed; we don’t have the common sense or gall to elect such a man anymore. He can open doors to a better America, but we want them closed due to fear of real “hope” and true “change.”

campeona5

Buy PHYSICAL SILVER…end the fiat paper ponzi!! Inflation is a stealth tax on every working citizen!!

TERRYMCKINNEY32

This is what you get when your government,and ours,is owned through donations(bribes)from the corporations that own the world economy.

Orcbuu

This man must be really the president but the amerikan people love there thick celebs and superstars (Obama the Bastard) more then there freedom, rights, and even more the World.
Im not an Amerikan im an Free-Human-Orderer

rast123456789

Alright Everyone we gotta spread the word of Liberty and Peace aka Ron Paul Remember Grass roots movements are key. Post signs and pass out literature in your own town spread it on the web be creative. Long Live the rEVOLolution!!!

msungs

End the Fed! The Federal Reserve as Federal as Federal Express. They are going after the pennies. I predicted this when I learned that pennies that are made pre-1982 are over 95% copper. The Republic is burning. I see this video only has 14,000 views, meanwhile American Idol and Rap crap have millions. We have an uninformed/uneducated citizenry. End the Fed. Peter Schiff and Ron Paul for President 2012. I am glad I moved to Germany to get away from the “Owe”bama/Bernanke Regime.

LordSparkisvati

This is what Rome must have felt like in their last few years. There is no way this can continue.

Forest

Fortunately throughout history, while these shrill apocalyptic cries go to be wholly unfounded, American society continues to thrive despite you know-nothing not-helping doomsayers – time and time again. Must be confusing to have to live in that rabbit hole decade after decade, even with history piling up against you.

Circa 1964:

“The paranoid spokesman sees the fate of conspiracy in apocalyptic terms—he traffics in the birth and death of whole worlds, whole political orders, whole systems of human values. He is always manning the barricades of civilization. He constantly lives at a turning point. Like religious millenialists he expresses the anxiety of those who are living through the last days and he is sometimes disposed to set a date for the apocalypse. (“Time is running out,” said Welch in 1951. “Evidence is piling up on many sides and from many sources that October 1952 is the fatal month when Stalin will attack.”)”

GB

Yeah, a $13 trillion national debt and a dollar losing about 95% of its purchasing power since 1913 are sure signs of greatness.

And your quote is irrelevant.

Forest

Do you feel like those guys walking around with a ‘THE END IS NEAR’ sign and wonder why everyone else isn’t freaking out? And why you are the only one in posession of this sacred knowledge.

Why is our petty government so timid to make coins, gold and silver our official currency? Because they want to opress us with a piece of paper that is not really about currency.

fred the protectionist

Ron Paul is such a Merchantilist, obsessed with hoarding gold at all costs. Or he’s a Dragon that wants to sit on his pile of gold. Or a leprechan, “Where’s me pot of gold.”

GB

I thought mercantilists (such as France some time ago) were into trade protection, producing everything in house.

fred the protectionist

Yes I know that’s what Free Traders think, because you are all brainwashed by your own talking points.

Merchantilism is about governments primary obsession with hoarding GOLD, and that’s about it. If it can be done through trade like the British Empire did, then that’s how you hoard GOLD. If it can be done by protecting your markets, then that is how you hoard GOLD.

Forest

Actually, maybe you should be asking why every time, in the history of the civilization, a country that has gone on the gold standard – that gold standard has failed.

While you are at it, maybe ask yourself why 100% of all transactions occur across the planet, without requiring gold to transact, balance, or settle.

Must be mind-blowing to open your eyes and see that the world can exist without your little preciousssssss…

Well isn’t that nice that you two trolls defend your girlfriend the government and you both are willy nilly! & it’s sad that you guys aren’t willing to accept the truth! Fred and Forest you two are like Brothers who have make no sense and willing to accpet a piece of paper as your currency! Good luck with your little funny money.

fred the protectionist

Turning “The Government” into the villain just don’t ring well with most folks, try turning “The Jews” into a villain instead. Makes more sense, and it’s had a great success rate in history.

David

Roflmao, Bottomline this is perfect, you said that so well LOLOLOLOL 🙂

Citizen

Again Dr. Paul tells it as it is!
Our Government screws up everything it manages including minting coins.

Now how the heck can the US Mint run out of planchets???
Oh, OOOH… I forgot they don’t allow supplier competition and can only purchase from three (3) inept exclusive contract vendors, rather than soliciting open markets for planchets, you know that thing called “Free Trade” isn’t practical for our US Government.

OurTimeIsOut

Is the valueless dollar even made in America anymore?

fred the protectionist

Give all your dollars to me if it is so value’less.

Forest

I’ll take your ‘worthless’ dollars too!

And, you can go watch them get printed if you like – not that I wouldn’t expect you to ACTUALLY see it before your plane rams into the side of the building.

See? Start a conversation with some rhetorical drivel and it doesn’t do much for progressing a conversation?

makewuvnotwar

The constitution gives congress the power to coin money, and set up the measures of precious metals the coins contain. The constitution does not give congress the power to print paper money, or the authority, to delegate it’s authority, to Jewish banking cartels.

Dfens

Seriously, can you not read? I’ve quoted the Constitution, explained what it said, and gave you a link so you could read the quote in context. What more do I have to do to explain this to you? If you’d rather hate than engage your brain even for a single tiny second, then by all means, support Ron Paul. Maybe they can find a special place for all of you people.

Dfens

No State shall… make any Thing but gold and silver Coin a Tender in Payment of Debts; – US Constitution

Sorry about the double negative, these aren’t my words, but those of the founding fathers. This part of the US Constitution has been read by normal Americans to me any state can coin it’s own gold and silver coins. Why do the Libertarians focus all their energies on the federal government when right now without any new laws they could get all 50 states to coin gold and silver money?

Maybe the states aren’t stupid? Maybe the states know we owe communist China more that $9 trillion and they don’t want to be sucked dry of all their gold reserves?

Citizen

I’m surprised Dfens, you actually made a valid point regarding America’s massive deficit spending and the resulting Debt.

YES the States can and probably should begin minting their own currency in either Gold or Silver, But the FED would have to PERMIT (change the current law) to allow these coins to be used as LEGAL TENDER and not tax US in FRNs when their magic inflationary machines forces the bullion up
AND
NO the Chinese would not “suck dry all our gold reserves”, mainly because Gold and Silver are measured by weight and not denominated in fixed Federal Reserve Notes values. Of course that’s assuming that Tim isn’t stupid enough to try and fix the FRNs value to 1 ounce of Gold or Silver coins while simultaneously printing more green wallpaper.
Today Gold trades for around 1,250 Federal Reserve Notes (aka Dollars) and that will likely run up to 2,500 to 5,000 FRNs very soon if Tim and Ben keep papering the streets with FRNs.

The beauty of the Gold or Silver standard is that We the People gain back control of our currency as a “Store of Value” and could voluntarily exchange our FRNs in for “real money” and thereby avoid most of the Government’s TAXATION BY CURRENCY DILUTION.

“Free Trade” would be conducted by exchange of gold and silver ounces for goods and services. I can envision buying a new Ford Mustang for 1,200 silver ounces (not Dollars) or about what we paid for a 1965 Tang in Silver Dollars back then.

fred the protectionist

Wrong, whoever we have a trade deficit would suck the US dry of gold in less then 6 months, and we’d be back on paper money before you can say “Free Market”.

Dfens

Am I the only one who listens to what Ron Paul says? Uh, Citizen, the point Ron Paul makes is that the value of our currency would float with the market value of gold. The market value of gold right now is $1250/oz, that means a dollar would then be worth 1/1250th of an ounce of gold. That’s the market rate. If we back the dollar with gold at that rate then do you really think we have 5,600,000 ounces of gold in Ft. Knox? Because we have, at that point, guaranteed the Communist Chinese that we do and they will be first in line to cash in their dollar reserves for gold.

The fact of the matter is, we don’t only have the Chinese to worry about. If we don’t have enough gold reserves to cover all of the M3 money out there at $1250/oz, then the the Congress will have to devalue the dollar until its value is low enough so they have the gold reserves to cover each and every dollar in circulation. In this scenario once we go to a gold standard your money will instantly be worth probably 1/1000th of what it was worth the day before. Is that your answer to “inflation” ? That’s stupid beyond belief. It would instantly take a truckload of dollars to buy a loaf of bread.

I personally don’t have any problem with going to a gold standard if we use sufficient planning to do so, and we have sufficient market protections (tariffs) to give us at least a break even trade status with foreign countries. To go to a gold standard now would, just like all of Ron Paul’s economic plans, be national suicide right now. It would benefit no one but his Communist Chinese masters. Why do you people hate America so much? Move to Communist China if you love that country more than you do the USA.

Dfens

Am I the only one who listens to what Ron Paul says? Uh, Citizen, the point Ron Paul makes is that the value of our currency would float with the market value of gold. The market value of gold right now is $1250/oz, that means a dollar would then be worth 1/1250th of an ounce of gold. That’s the market rate. If we back the dollar with gold at that rate then do you really think we have 5,600,000 ounces of gold in Ft. Knox? Because we have, at that point, guaranteed the Communist Chinese that we do and they will be first in line to cash in their dollar reserves for gold.

The fact of the matter is, we don’t only have the Chinese to worry about. If we don’t have enough gold reserves to cover all of the M3 money out there at $1250/oz, then the the Congress will have to devalue the dollar until its value is low enough so they have the gold reserves to cover each and every dollar in circulation. In this scenario once we go to a gold standard your money will instantly be worth probably 1/1000th of what it was worth the day before. Is that your answer to “inflation”? It would instantly take a truckload of dollars to buy a loaf of bread.

I personally don’t have any problem with going to a gold standard if we use sufficient planning to do so, and we have sufficient market protections (tariffs) to give us at least a break even trade status with foreign countries. To go to a gold standard now would, just like all of Ron Paul’s economic plans, be national suicide right now. It would benefit no one but his Communist Chinese masters.

fred the protectionist

That statement in the Constitution seems to be more of another way to enforce the concept behind the “Dormant Commerce Clause”. If states could make their own paper money they could do what China is doing now, devaluing their currency to increase exports. Which would cause trade wars between the states.

To the Ronulans, all they see when they read it is, “Gold! Constitution! Gold! Constitution and Gold! Gold and the Constitution! See SEE See See!!!” They have a slight reading impairment if you ask me.

fred the protectionist

That statement in the Constitution seems to be more of another way to enforce the concept behind the “Dormant Commerce Clause”. If states could make their own paper money they could do what China is doing now, devaluing their currency to increase exports. Which would cause trade wars between the states.

To the Libertarians, all they see when they read it is, “Gold! Constitution! Gold! Constitution and Gold! Gold and the Constitution! See SEE See See!!!” They have a slight reading impairment problem if you ask me.

fred the protectionist

OK so cap locks and Roooonulan word will get you a “Comment under Moderation” effect, gotcha.

9:14 am: "ooo wow nice attempt at a ad hom! Did the reds steal the election from you? Where is McCarthy when you need him? Am I right?" - JBrown

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